Oct 3 2024: Asian stocks pulled back from a 32-month high on Thursday, with Hong Kong’s Hang Seng index pausing after a rapid surge, while Japan’s Nikkei rallied on reduced prospects for further monetary tightening.
The Hang Seng dropped 1.6%, contributing to a broader 1% decline in MSCI’s Asia-Pacific shares index outside Japan. The rally in Hong Kong had been spurred by a series of Chinese stimulus measures aimed at boosting economic growth.
Meanwhile, Japan’s Nikkei jumped 2% following comments from Japan’s new Prime Minister, Shigeru Ishiba, and Bank of Japan Governor Kazuo Ueda, both signaling that additional rate hikes are unlikely this year. BOJ policymaker Asahi Noguchi further reinforced this stance by advocating for maintaining loose monetary conditions.
The yen slipped 2% overnight, hitting a one-month low of 147.24 per dollar. Analysts like Tony Sycamore from IG suggest that the yen’s outlook will now largely be influenced by U.S. economic data, including Friday’s non-farm payrolls report, which could push the dollar/yen exchange rate toward 149.40.
In other markets, European stocks were weaker, with EUROSTOXX 50 futures down 0.5%, while Nasdaq and S&P futures also dipped 0.3% and 0.2%, respectively. Sterling fell to a two-week low following comments from Bank of England Governor Andrew Bailey, indicating the possibility of more aggressive rate cuts if inflation continues to decline.
In the U.S., Treasury yields edged higher as strong private payrolls data added to confidence in the labor market ahead of the government’s jobs report. Two-year Treasury yields were flat at 3.652%, and 10-year yields were steady at 3.792%.
Oil prices rose amid concerns that escalating Middle East tensions could disrupt supplies, with Brent crude up 1.2% to $74.82 per barrel. Gold hovered near record highs at $2,652.75 an ounce, benefiting from safe-haven demand.